Binance, one of the world’s largest cryptocurrency exchanges by trading volume, is expanding its lending business in a bid to attract more crypto borrowers. Dubbed ‘Binance Loans,’ the influential venue announced the service that it says leverages existing crypto assets as collateral for loans.
All Binance registered users are eligible to borrow on its loans that cover several cryptos, including BUSD and USDT. Binance Loans also supports a range of varying loan periods, with interest calculated on a daily basis, as well as the use of several coins as collateral, including BTC and ETH.
While loans terms range from 7 to 90 days, borrowers will be given an overdue duration of three days, during which they will be charged three times the regular interest. However, those who fail to repay their loans after the grace period expires will see their collaterals liquidated to pay off crypto debts.
The company said in an announcement on Tuesday that early birds will receive a 20 percent discount on the daily interest rate, with the lowest rate being 0.0224%.
The launch is another move of Binance in its bid to diversify its business lines to attract and retain users. It also comes months after it rolled out margin trading, lending and revealed plans to add futures trading on its platform.
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Binance diversifies crypto lending lines
Binance came into a partnership last year with Cred, a provider of crypto borrowing and lending, which claims over $300 million in credit facilities. Cred offers a decentralized lending platform that allows customers of stablecoin issuers, exchanges, and wallets to earn up to 10 percent interest on their crypto-shares.
While its staking service is still in its infancy, Binance already allows its users to earn interest on their cryptocurrencies through providing loans to those interested in borrowing digital assets.
Initially, users were able to lend BNB, ETC, and USDT, but the exchange plans to scale up and will add more coins in the future, though it didn’t reveal which ones or specific timing at this point.
Dubbed ‘Binance Lending,’ yields were generated through pilot lending products on these three tokens using fixed-investment plans available on the basis of a 14-day maturity term.
In the meantime, Binance’s margin trading business charges users who borrow BNB and USDT an annualized interest of as much as 10.9 percent and 10.03 percent, respectively.